RBZ launches Fintech regulatory sandbox

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·      Meant to be a live environment in which to test fintech innovations before being fully implemented in the market

·      RBZ says initiative meant to promote synergy between traditional financial sector and fintech sector

·      Cryptocurrency innovations not eligible for sandbox

Harare – The Reserve Bank of Zimbabwe (RBZ) on Monday launched a financial technology (Fintech) regulatory sandbox which it says will be a live, controlled environment meant to allow inventors and innovators in the Fintech sector to successfully test their products and services without compromising the safety of consumers and the traditional financial sector.

The regulatory sandbox concept was necessitated by the surge in the number of fintech startups looking to provide innovative digital financial products and services in Zimbabwe.

This has obviously meant that these startups not only need support structures but also a smooth operating environment.

It is against this background that the RBZ decided to put together standard operating protocols.

These essentially would inform and control the testing process of the respective tech in question.

An operating environment that is regulated makes testing and rollout of fintech much easier. This would also ensure that only relevant fintech that is suited to existing problems gets approved.

The concept also was a result of seeing the need for fintech to be in sync with the mainstream financial sector.

The RBZ said the sandbox will drive collaboration between the traditional financial sector and budding fintech industry while also promoting healthy competition which will benefit consumers.

It is also meant to enhance financial security and monitor disruptive technologies to ensure appropriate safeguards to manage the risks and contain the consequences of failure.

Innovations that will be eligible for participation in the sandbox include mobile money services, retail payment platforms, money transfer services, cyber security services among many others but crypto currency innovations were specifically listed as non-eligible.

The Central Bank banned the use of cryptocurrency in Zimbabwe in 2018, citing that they bore a risk to financial stability which includes risk of loss due to price volatility, theft or fraud, money laundering and other criminal activities.

They also stated that cryptocurrencies could be used to facilitate tax evasion as well as externalization of funds in violation of a country’s laws.

This new sandbox initiative might also be a way to peg the influence of financial technology on currency and economic stability in the country.

Reserve Bank last year placed restrictions on mobile money operations on the pretext that they were the main source of liquidity for the parallel market which fueled instability within the economy.

“These unprecedented measures have been necessitated by the need to protect consumers on mobile money platforms which have been abused by unscrupulous and unpartisan individuals and entities to create instability and inefficiencies in the economy,” said the apex bank in a press statement.

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